Test company supplies furniture to three local retailers, Hanson, Penner, and Yorkville Inc. The following exhibit presents representative revenues and costs of Test by customers for the year 2019. Additional information on Tests costs for different activities at various levels of the cost hierarchy is as follows:

	Hanson	Penner	Yorkville	Total
Sales	$750,000	$360,000	$340,000	$1,450,000
Cost of goods sold	470,000	260,000	230,000	$960,000
Materials-handling labour	47,000	22,000	48,000	$117,000
Materials-handling equipment (Cost written off as amortization)	11,000	6,000	10,000	$27,000
Rent	16,000	8,000	19,000	$43,000
Marketing support	12,000	9,000	11,000	$32,000
Purchase orders and delivery processing	13,000	7,000	12,000	$32,000
General administration	20,000	12,000	16,000	$48,000
Total operating costs	589,000	324,000	346,000	$1,259,000
Operating income	$161,000	$36,000	-$6,000	$191,000

1. Materials-handing labour costs vary with the number of units of furniture shipped to customers.

2. Different areas of the warehouse stock furniture for different customers. Materials-handling equipment in an area and amortization costs on the equipment are identified with individual customer accounts. Any equipment not used remains idle. The equipment has a one-year useful life and zero disposal price.

3. Test allocates rent to each customer account on the basis of the amount of warehouse space occupied by the products to be shipped to that customer.

4. Marketing costs vary with the number of sales visits made to customers.

5. Purchase order costs vary with the number of purchase orders received; delivery processing costs vary with the number of shipments made.

6. Test allocates fixed general administration costs to customers on the basis of dollar sales made to each customer.

Required:

1. What are the relevant costs and relevant revenues when Test company considers dropping the Yorkville Inc. as a custom because of COVID-19?

2. Please calculate the operating income(loss) if Test drop Yorkville Inc. as a custom.

3. Should Test keep Yorkville as a customer or just drop it? Why?